The realty sector may be facing a massive slowdown, but this hasn’t ruined builders’ appetite to buy land.
At an auction of four plots in Navi Mumbai by the City and Industrial Development Corporation (CIDCO) on Thursday, builders bought land at exorbitant prices - CIDCO earned Rs 394 crore from these sales.
This includes Rs 250 crore for a 7,430 sqm Sanpada plot, and Rs100 crore for a commercial plot at Vashi.
The housing body got good rates in the auction, said Mohan Ninave, CIDCO’s public relations officer. “We got a good response for the tenders and good rates at the auction,” said Ninave.
Seventy-one builders attended the auction for plots in Sanpada, Koperkhairane and Vashi.
The Sanpada plot on Palm Beach road, which sold for Rs250 crore, was bought by M/s Bhumiraj Infrastructures Private Limited.
According to a leading builder, who did not wish to be named, this was a very costly deal.
“The market conditions are bad, as there are no sales happening.Just purchasing at such exorbitant prices will only make homes more expensive,” the builder said.
He said the Sanpada project would have to open bookings at approximately Rs22,000 per sqft for the new houses.
Realty experts, however, feel such land purchases are nothing more than speculative bidding.
“The prices are not productive,” said Pankaj Kapoor, CEO, Liases Foras, a real estate research firm.
“Many builders purchase plots on the premise that the FSI (Floor Space Index) will be hiked in the future and that this will allow them to build higher and make more money,” he said.
Although the real estate market has been experiencing a slowdown, CIDCO, which has been auctioning plots at regular intervals, has been receiving a good response, experts said.